Wednesday, 3 February 2016

It was a very mixed day for the VIX, opening a little lower, but then swinging to a morning high of 24.99. With equities flooring at sp'1872, and soaring in the late afternoon, the VIX cooled, settling -1.5% @ 21.65. Near term outlook offers the sp'1970s, which would likely equate to VIX 18/17s.

VIX'60min

VIX'daily3

Summary

*stockcharts suggested the VIX spiked this morning to 27.70. However my own trading screen only showed 24.99, and I'm going with the latter, as also suggested via other volatility instruments.
--

Suffice to add... VIX almost hit 25, but then rapidly cooled in the afternoon, as the sp'500 swung from 1872 to a peak of 1918.

VIX looks set to fall under the key 20 threshold, with 18/17s next Wed/Thursday.
--

US equities closed broadly higher, sp +9pts @ 1912 (intra low 1872). The two leaders - Trans/R2K, settled higher by 1.0% and 0.1% respectively. Near term outlook offers broad upside to the sp'1970s next Wed/Thursday, when the Yellen will appear. Sustained action >2K still looks out of range, with regular bearish price action still supporting that notion.

sp'60min

Summary

closing hour: a new intraday high of 1918... 2.3% above the morning low.
--

.. and another crazy day in the world's most twisted casino comes to a close.

Seeing a latter day rally is never a surprise in this market, but somehow.. the power of the upside usually surprises me.

Oil remains a major determinant for this market, with WTIC settling higher by around 9%.
-

Best guess: broad upside to the 1970s next week... but NO sustained action >2K.
--

US equities have clarified a short term floor of sp'1872 (with VIX 24.99), and have already swung a full 2% higher, back above the 1900 threshold. A Friday close in the 1920/30s now looks rather probable.. with the 1970s next Wed/Thursday. Oil sure is helping... +8.7% in the $32s.

sp'60min

VIX'60min

Summary

*clear break of trend on the VIX, already turning negative.
--

The hourly spiky floor candles are usually a good tell, and here we are.. with a net daily gain now on the menu.

Regardless of the exact close though... we've a short term floor, and look headed broadly higher into the middle of next week - when the Yellen shall appear.
-

Seen on the smaller hourly equity cycle, there are at least a trio of candles offering the early sign of a floor from sp'1872. VIX remains +5% in the low 23s... and if the market can rally into the close, a net daily decline is just about viable. USD continues to fall, -1.9% in the DXY 97.00s.

sp'60min

UUP, daily

Summary

Rest of today will be rather interesting.

From a pure cyclical perspective, we're set to hold the 1872 low.. and then battle upward into the close... and all the way across much of next week.

Target is effectively a 5% swing from the 1870s to 1970s across 6-8 trading days. Considering the ongoing price action, that is VERY viable.
--

notable strength...

AA +7%... but still in the $7s.
FCX +9%.. but only in the 4s

--

With the USD on the decline... precious metals are naturally on the rise..

Gold +$14, with Silver +3.4%

The related mining stocks are following..

A clear break of trend, with GDX +6.5%.. one of the best moves since last August.
-

stay tuned !

2.30pm.. sp +4pts @ 1906... and even I'm surprised at the power of the turn.

The smaller hourly equity cycle remains prime to tick back upward. Indeed, by the Friday close, the market should at least be in the sp'1910/20s, but the 40s are actually possible. VIX remains moderately higher in the 23s, but looks highly vulnerable to sub 20s by Friday/next Monday.

sp'60min

UUP, weekly

Summary

*the USD is currently -1.4% in the DXY 97.50s. We're clearly brushing rising support that goes back to summer 2014.

I'm still broadly bullish USD, not least as the BoJ and ECB continue to print their currencies - and economies, to oblivion.
--

As for equities right now... its still floor building time... not least helped as Oil +6.0%.
--

notable weakness..

BAC -4.1%.. as there sure won't be any rate hikes until Q4 at the earliest.
F -2.1%, TSLA -4.7%
INTC -2.2%
--

US equities are battling to push upward from the morning low of sp'1872 (with VIX 24.99). It would seem we've seen a natural retrace (from 1947) complete, with the market now set to claw upward to the 1970s.. despite Oil inventories, which are now regularly coming in around 7-8 million barrels a week.

sp'60min

VIX'60min

Summary

*Oil +6.2%... utter madness... but then... so was last week!
--

I do understand why some are now getting seriously bearish (not least with price structure on many charts.. a big bear flag - as Oscar also noted).. yet the weekly charts still suggest to me to hold off for another week.

I'd feel a lot more comfortable getting involved once Yellen has appeared.. from sp'1970s.. with VIX 18/17s.

The opening gains were indeed shaky, with the market unravelling to sp'1872.. with VIX 24.99. It seems highly probable that the market will stabilise from here.. and begin a difficult battle upward to the 1970s. With another giant inventory oil surplus of 7.8 million barrels, Oil is swinging wildly.. now +3.3%.

sp'60min

Summary

So... a morning washout - helped by oil, and cyclically, we're now setup to grind back upward, from the typical turn time of 11am.

Clearly though.. the broader picture remains very bearish, and both this morning and yesterdays price action are further examples of just how weak the US market now is.
--

notable weakness...

BAC, daily

Kuroda - and of course Draghi, really are wrecking the financials. There are going to be some financials impacted by 'mini black swans' this spring, from the oil/gas/mining sector.

Next support for BAC... $10... and that does seem extremely probable, relative to sp'1700/1600s.
--

Meanwhile, here in London city...

Rather good indeed, another day closer to summer :)
-
time to cook
-

Bonus chart...

VIX'60min

Stockcharts is saying we had a print of 27.70, but my trading screen only shows 24.99. I'm going with the latter.
-

Having seen an effective 50% bounce-retrace (sp'1947) of the 2081/1812 wave, it was a pretty rough day for the US equity market, with the sp -36pts @ 1903. Far more important though is the state of the weekly cycles. From a pure cyclical perspective, the market arguably still needs to churn for another few weeks.

sp'weekly6

Summary

With a very significant net daily decline, the weekly candle has flipped from blue to red.

Underlying MACD (green bar histogram) cycle remains on very low side, and even if the market can battle upward to the sp'1970s, we'll not see a bullish cross until March.

A failure to see the MACD (black line) re-take the zero threshold is something equity bears should be seeking. The biggest declines in any cycle (whether nano 5min, or giant multi-year bear markets), is almost always when we have an initial down wave, a bounce, and then a much stronger secondary wave.
--

Bigger picture, still bearish?

The following chart is highly speculative, but the pattern IS clearly similar, and if the analogy is to be used, this is not Jan'2008, we're in the equivalent of July/August.

sp'weekly8f

Every market cycle is unique of course, but in theory, we should break the sp'1812 low by late March.

Something to be on the lookout for are a few names in the oil/gas/mining sector to file for bankruptcy this spring. Industry capitulation is still due.
--

The January close was a clear bullish break, and we're already in the 129s. Now its a case of whether the Jan'2015 high of $134.80 is broken above. Considering the bearish equity outlook into the spring/summer, TLT in the 140/150s is a viable target before bond prices max out.

US equity indexes closed significantly lower, sp -36pts @ 1903 (intra
low 1897). The two leaders -Trans/R2K, settled lower by -2.9% and -2.3%
respectively. Near term outlook offers a moderate bounce, before a brief
foray to 1890/80 zone... and then pushing back upward to the 1970s next
week.

sp'daily5b

Trans

Summary

Suffice to add, broader market action from late December remains very bearish. Every bounce is being sold into.

Price structure on the Transports is particularly bearish, with a very clear multi-week bear flag. The 50dma remains first key resistance, and by end month that will be around 7100/7200.
--

Disclaimer: These pages (and especially all charts) are for informational purposes only. Most of the numerical data/calculations 'should' be correct. However, YOU make your own decisions as to if you think any comment or data point/chart is correct or not. All comments posted via Disqus/Google (or any other type) users may/may not be agreed with by yours truly.

I (Permabear Doomster) am not a financial advisor as officially endorsed by any national government, corporation, financial/securities regulatory authority in neither the USA, UK, or any part of the world. None of the posts/comments in these pages are intended as trading/investment advice. They are merely my opinion on where a given market/stock and any other 'instrument, index, etc' may move at any future time.